Retailers Face a Disappointing December, Says Credit Suisse

By Sam Mamudi

AP

Keep ‘em coming

This could be bad news for investors in retail stocks: Analysts at Credit Suisse said today they think it’s going to be a disappointing month for most of the sector. Blame Sandy, the fiscal cliff and/or the weather, but whatever the case the news could be grim.

That may be particularly unfortunate because, as the analysts note, December is so important to retail — last year December sales were 17.4% of the annual total for department stores (excluding J.C. Penney (JCP) and Dillard’s (DDS)) and 12.6% of the total for mass merchants (excluding Walmart (WMT)).

As the analysts wrote in a report Monday:

We continue to anticipate competitive retailers to continue to benefit from JCPenney’s continuing transitioning efforts. Retailers that are more exposed to “FAB” (Footwear/Accessories/Beauty) categories, such as Nordstrom (JWN) and Macy’s (M), will likely outperform their less exposed peers in the department store space. Among the department stores, we expect Nordstrom to deliver the strongest results for the month. In mass merchants, we continue to expect Costco (COST) to dominate the value segment.

Consensus estimates for December, according to Retail Metrics data, fell another 0.2 percentage point on Monday for both same-store sales and the tallies excluding drug stores — to increases of 1.9% and 3.7%, respectively. Retail Metrics noted that the average analyst estimate has declined by 0.6 percentage point from the start of the month.

“This is significant downward move to sales estimates for the most important month of the year,” said Retail Metrics president Ken Perkins…The gain would mark retailers’ worst December performance since 2008, Perkins told MarketWatch.

Despite the bad news, some retail stocks are having a good day, with Macy’s up 4.3%, Penney climbing 2.9%, Abercrombie & Fitch (ANF) rising 3.2% and Nordstrom up 1.4%.

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